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Third wave US LNG: a $100 billion opportunity | Wood Mackenzie
1. What is the outlook for US LNG over the next five years?
- At 76.4 million tonnes, US exports of LNG in 2022 were the third highest globally, behind Australia and Qatar.
- if current momentum continues between 70 mmtpa and 190 mmtpa could be added to US LNG capacity before the end of the decade. That would more than double current exports.
2. Who’s investing in new US LNG capacity?
- Over US$100 billion in US LNG production over the next five years. Three-quarters of that total is expected to be invested in pre-FID projects.
- Both privately and publicly-owned developers are expected to invest in building new capacity. Most pre-FID project developers are currently seeking external financing for this investment.
- EPC providers, including McDermott, Kiewit, Zachary and JGC, are eyeing developments but remain cautious, having suffered from major cost overruns in the past. Bechtel has already agreed contracts with numerous advanced pre-FID projects
3. What are the risks to growth?
- Costs
- Overruns
- Resources
- Competitive Pressures & Tight margins
4.How are US LNG developers mitigating these risks?
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Rerating trains for higher capacity, debottlenecking and adding further trains should provide opportunities to increase production in the future. Further revenue could come via efficient feedgas procurement and sale of pre-commercial volumes. Another source of additional returns could be through retaining access to the potential upside from high global commodity prices.
Developers are also looking at ways to mitigate value chain emissions.
Third wave US LNG: a $100 billion opportunity | Wood Mackenzie
A new wave of projects could make the US the world’s largest LNG supplier by some margin. But cost inflation and competition are creating challenges for securing finance.
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